Before entering the property investment market, investors are advised to have a clear vision of their goals and a mission plan to achieve them.
Investors are advised to have a clear vision of their wants and needs before spending large swathes of cash on a property, with one property expert tipping that regional areas currently experiencing upwards of 20 per cent growth may recoil in the next 12 months.
Speaking on a recent Smart Property Investment podcast, founder and director of Rethink Investing Scott O'Neill explained the importance of supporting each purchase with a clear “plan and purpose”.
“That’s where most investors get it wrong. I literally have a conversation every day of the week with someone that’s built a portfolio, relatively large too. And they’ve hit a problem. They can’t get more lending. They don’t have enough money to retire on, or they’ve got to sell off an underperforming asset or there’s too many touch points for the properties, lots of maintenance. And they’re literally getting sick of it,” Mr O'Neill said, underlying that all of this is the result of a poor or no plan.
“If you don’t buy a property with a plan and a purpose, then what are you buying it for?”
According to Mr O'Neill, with regional markets facing the possibility of rapid decline once property purchasers realise the cost of running a holiday home, planning and patience are key.
“Think about the types of properties you want to hold into retirement,” Mr O'Neill tipped.
“So I had this conversation with a client because everyone, and this is going to happen a lot, everyone’s running hot with the residential market because they think it’s going to explode. And it may, but it may only grow 10 per cent. And then what? You’ve got a property that is a fairly low yielding.
“There will be a point when the economy changes. And there is a lot of, I guess potential for these markets to pull back a little bit.”
Mr O'Neill’s advice for property investors is to “look at the types of properties you want to hold long-term into retirement”.
“That’s something my wife and I always did really carefully. We bought the properties that are going to be held forever. And that’s why we were kind of more geared towards cashflow,” Mr O'Neill concluded.
“Because if you don’t have a good yield on your property, then how does it pay you a residual income that’ll fund your retirement in one day?”